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November 15, 1993

IBM GROSS PROFITS DOWN AGAIN

By CBR Staff Writer

IBM Corp’s gross profit margin on computer hardware continued to decline in the third quarter, the company’s 10Q filing with the Securities & Exchange Commission discloses; according to the Wall Street Journal, the company also reported that its spending on research and development in the third quarter fell 20% from the year ago level; gross margin on hardware slumped to 30.2% in the third quarter, down from 30.6% in the second quarter and 40.5% a year earlier; on software, the third-quarter gross margin was 61.3%, down from 62.0% in the second quarter and 68.1% a year ago; on maintenance it was 53.2%, down from 53.6% in the second quarter and 55.2% a year ago; on services it was 13.2%, down from 15.1% in the second quarter and 16.8% a year ago; and on rentals and financing, it was 59.4%, down from 59.8% in the second quarter but above the year-ago level of 58.7%; cash rose to $1,570m at September 30 from $1,150m at June 30, cash equivalents fell to $3,760m from $4,880m and mrketable securities rose to $840m from $737m; short-term debt was $16,150m at the end of the third quarter, down from $17,150m, but long-term debt rose to $15,390mm from $14,560m; on the brighter side, selling, general and administrative expenses shrunk 8.9% in the third quarter to $4,260m.

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